Crude oil breaking key support

The Institute for Supply Management said its factory index rose to 54.2 in February from 53.1 a month earlier, thus causing the bulls to still stay in the game this morning, even as the MAR13 E-mini S&P 500 dipped to a half-point below 1500. The market didn’t stay down there for long, as it rallied quickly from there all the way to 1517.50. Even with the political measures making headlines, ultimately we notice that the markets are now very driven by hard economic data releases, such as employment, personal spending, and obviously today’s ISM. Next Friday’s jobs data will be very interesting to see. This market has tried to find more sellers below the 1500 level three times now recently, and was not successful. It looks like buyers think there is value to be had in buying this market below 1500.

Many soft commodities are down today with a strong U.S. dollar trading day. The U.S. Dollar Index is up .59% to 82.48, while sugar is down 2.12%, orange juice is down 4.26%, and cocoa is down 1.83%. We believe the US dollar is in a bullish environment and our first target is 84.

One other factor which could be lending support to a bullish stock market is falling oil prices. We focus on this market today. We note that APR13 crude oil has recently broken down through an important trendline going back to last June. We believe crude is in a very bearish environment and our next two downside targets are $87 and then $82. If crude stays below $87, we view this as very bearish, and we would not be surprised to see crude make an extended move below $82 this year.

Click to enlarge.

About the Author

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.